UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSRS
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number 811-02423
Van Kampen Corporate Bond Fund
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in charter)
1221 Avenue of the Americas, New York, New York 10020
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip code)
Ronald Robison
1221 Avenue of the Americas, New York, New York 10020
- --------------------------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 212-762-4000
Date of fiscal year end: 8/31
Date of reporting period: 2/28/05
Item 1. Reports to Shareholders.
The Fund's semi-annual report transmitted to shareholders pursuant to Rule 30e-1
under the Investment Company Act of 1940 is as follows:
Welcome, Shareholder
In this report, you'll learn about how your investment in Van Kampen
Corporate Bond Fund performed during the semiannual period. The portfolio
management team will provide an overview of the market conditions and
discuss some of the factors that affected investment performance during
the reporting period. In addition, this report includes the fund's
financial statements and a list of fund investments as of February 28,
2005.
THIS MATERIAL MUST BE PRECEDED OR ACCOMPANIED BY A PROSPECTUS FOR THE
FUND BEING OFFERED. THE PROSPECTUS CONTAINS INFORMATION ABOUT THE FUND,
INCLUDING THE INVESTMENT OBJECTIVES, RISKS, CHARGES AND EXPENSES. PLEASE
READ THE PROSPECTUS CAREFULLY BEFORE INVESTING.
MARKET FORECASTS PROVIDED IN THIS REPORT MAY NOT NECESSARILY COME TO
PASS. THERE IS NO ASSURANCE THAT A MUTUAL FUND WILL ACHIEVE ITS
INVESTMENT OBJECTIVE. FUNDS ARE SUBJECT TO MARKET RISK, WHICH IS THE
POSSIBILITY THAT THE MARKET VALUES OF SECURITIES OWNED BY THE FUND WILL
DECLINE AND THAT THE VALUE OF THE FUND SHARES MAY THEREFORE BE LESS THAN
WHAT YOU PAID FOR THEM. ACCORDINGLY, YOU CAN LOSE MONEY INVESTING IN THIS
FUND.
<Table>
<Caption>
---------------------------------------------------------------------------------------
NOT FDIC INSURED OFFER NO BANK GUARANTEE MAY LOSE VALUE
---------------------------------------------------------------------------------------
NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY NOT A DEPOSIT
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</Table>
Performance Summary as of 2/28/05
<Table>
<Caption>
A SHARES B SHARES C SHARES
since 9/23/71 since 9/28/92 since 8/30/93
- --------------------------------------------------------------------------------------------
W/MAX W/MAX W/MAX
4.75% 4.00% 1.00%
AVERAGE ANNUAL W/O SALES SALES W/O SALES SALES W/O SALES SALES
TOTAL RETURNS CHARGES CHARGE CHARGES CHARGE CHARGES CHARGE
Since Inception 7.91% 7.75% 5.98% 5.98% 5.12% 5.12%
10-year 6.85 6.32 6.34 6.34 6.03 6.03
5-year 7.07 6.04 6.24 6.00 6.24 6.24
1-year 4.05 -0.89 3.12 -0.83 3.12 2.13
6-month 2.93 -2.03 2.55 -1.45 2.55 1.55
- --------------------------------------------------------------------------------------------
30-Day SEC Yield 3.70% 3.14% 3.14%
</Table>
PERFORMANCE DATA QUOTED REPRESENTS PAST PERFORMANCE, WHICH IS NO GUARANTEE OF
FUTURE RESULTS, AND CURRENT PERFORMANCE MAY BE LOWER OR HIGHER THAN THE FIGURES
SHOWN. FOR THE MOST RECENT MONTH-END PERFORMANCE FIGURES, PLEASE VISIT
VANKAMPEN.COM OR SPEAK WITH YOUR FINANCIAL ADVISOR. INVESTMENT RETURNS AND
PRINCIPAL VALUE WILL FLUCTUATE AND FUND SHARES, WHEN REDEEMED, MAY BE WORTH MORE
OR LESS THAN THEIR ORIGINAL COST.
The returns shown in this report do not reflect the deduction of taxes that a
shareholder would pay on fund distributions or the redemption of fund shares.
Performance of share classes will vary due to differences in sales charges and
expenses. Average annual total return with sales charges includes payment of the
maximum sales charge of 4.75 percent for Class A shares, a contingent deferred
sales charge of 4.00 percent for Class B shares (in year one and declining to
zero after year five), a contingent deferred sales charge of 1.00 percent for
Class C shares in year one, and combined Rule 12b-1 fees and service fees of up
to 0.25 percent for Class A shares and up to 1.00 percent for Class B and C
shares. The since inception and 10-year returns for Class B shares reflect the
conversion of Class B shares into Class A shares six years after purchase. The
since inception returns for Class C shares reflect the conversion of Class C
shares into Class A shares ten years after purchase. See footnote 3 in the Notes
to Financial Statements for additional information. Figures shown above assume
reinvestment of all dividends and capital gains. SEC yield is a calculation for
determining the amount of portfolio income, excluding non-income items as
prescribed by the SEC. Yields are subject to change.
Lehman Brothers Corporate Bond Index is a market-weighted index of
investment-grade corporate fixed-rate debt issues with maturities of one year or
more. Lipper Corporate BBB-Rated Index is an index of funds with similar
investment objectives as this fund. Indexes are unmanaged and do not include any
sales charges or fees. Such costs would lower performance. It is not possible to
invest directly in an index. Source: Lipper Inc.
1
Fund Report
FOR THE 6-MONTH PERIOD ENDED FEBRUARY 28, 2005
Van Kampen Corporate Bond Fund is managed by the Adviser's Taxable Fixed Income
team.(1) Members of the team include David S. Horowitz, Managing Director of the
Adviser.
MARKET CONDITIONS
The period began in the midst of a slow down in economic recovery brought on by
lower-than-expected and downward revisions to prior payroll gains, resulting in
a downward trend in yields well into the third quarter. Despite this downward
movement, the Federal Reserve Open Market Committee reaffirmed its pledge to
raise the federal funds target rate at a measured pace and did so in its
meetings through the end of the period. This stance was supported by an increase
in economic growth, which picked up steam at the end of 2004.
Economic growth continued during the first two months of 2005. The yield
curve--which measures the difference in yields between short-, intermediate-and
long-maturity Treasuries--flattened further as yields of short- and
intermediate-maturity bonds rose while longer-term yields fell. The bulk of the
increase in yields occurred in February due, in part, to strong payroll numbers,
an upward trend in inflation numbers and testimony by Alan Greenspan indicating
an improving economy.
The generally optimistic economic environment had a positive effect for
corporate bonds. Spreads--which measure the additional yield over Treasuries
demanded by investors for assuming credit risk--tightened over the period,
though not uniformly. Performance at the sector level varied, with gaming and
lodging, energy and insurance among the best-performing sectors of the market.
Each sector benefited from improved earnings for key companies within such
sector. By contrast, automobile companies and their suppliers were among the
worst performers. The electronics sector also suffered.
(1)Team members may change without notice at any time.
2
PERFORMANCE ANALYSIS
For the six months ending February 28, 2005, the fund's return was 2.93 percent
(Class A shares, assuming no front-end sales charge was paid), outperforming the
Lehman Brothers Corporate Bond Index and the Lipper Corporate BBB-Rated Index.
TOTAL RETURNS FOR THE SIX-MONTH PERIOD ENDING FEBRUARY 28, 2005
<Table>
<Caption>
- ----------------------------------------------------------------------------
LEHMAN BROTHERS
CORPORATE LIPPER CORPORATE
CLASS A CLASS B CLASS C BOND INDEX BBB-RATED INDEX
2.93% 2.55% 2.55% 0.90% 2.81%
- ----------------------------------------------------------------------------
</Table>
THE PERFORMANCE FOR THE THREE SHARE CLASSES VARIES BECAUSE EACH HAS DIFFERENT
EXPENSES. THE FUND'S TOTAL RETURN FIGURES ASSUME THE REINVESTMENT OF ALL
DISTRIBUTIONS, BUT DO NOT REFLECT THE DEDUCTION OF ANY APPLICABLE SALES CHARGES.
SUCH COSTS WOULD LOWER PERFORMANCE. PAST PERFORMANCE IS NO GUARANTEE OF FUTURE
RESULTS. SEE PERFORMANCE SUMMARY FOR STANDARDIZED PERFORMANCE INFORMATION AND
INDEX DEFINITIONS.
The fund's strong performance relative to the Lehman index was driven in large
part by its focus on medium-quality corporate securities, which boosted its
performance relative to the more broadly constructed Lehman benchmark. Within
its portfolio, the fund benefited from an emphasis on the debt of insurance
companies, which outperformed strongly for the period. The fund also profited
from strong security selection in the paper and energy sectors.
The fund's interest-rate posture produced more mixed results for the period. The
low level of interest rates across the yield curve at the beginning of the
period led us to conclude that they had little room left to fall. As a result,
we kept the fund's overall interest-rate exposure well below that of its
benchmark. This posture was unfavorable to the fund's returns in those months
early in the period when the market rallied, but was more beneficial during
periods of rising rates, such as in January and February.
There is no guarantee the security sectors mentioned will continue to perform
well or be held by the fund in the future.
3
<Table>
<Caption>
RATINGS ALLOCATIONS AS OF 2/28/05
AAA/Aaa 13.8%
AA/Aa 11.8
A/A 20.8
BBB/Baa 42.1
BB/Ba 10.4
B/B 1.1
<Caption>
SUMMARY OF INVESTMENTS BY INDUSTRY CLASSIFICATION AS OF 2/28/05
Banking 12.9%
U.S. Government Agency Obligations 11.2
Electric 9.6
Automotive 5.9
Noncaptive-Consumer Finance 4.5
Healthcare 4.4
Integrated Energy 4.0
Property & Casualty 3.3
Wireline Communications 3.2
Media-Noncable 3.0
Paper 2.9
Sovereigns 2.8
Food/Beverage 2.5
Media-Cable 1.9
Natural Gas Pipelines 1.8
Noncaptive-Diversified Finance 1.7
Railroads 1.6
Life Insurance 1.5
Lodging 1.5
Entertainment 1.4
Retail 1.4
Brokerage 1.2
Diversified Manufacturing 1.2
Technology 1.1
Gaming 1.1
Construction Machinery 0.9
Chemicals 0.8
Tobacco 0.8
Real Estate Investment Trusts 0.7
Consumer Products 0.7
Pharmaceuticals 0.7
Aerospace & Defense 0.6
Oil Field Services 0.6
Environmental Services 0.5
Independent Energy 0.5
Mortgage-Backed Securities 0.5
Wireless Communications 0.4
Transportation Services 0.4
Airlines 0.4
Textile 0.2
</Table>
<Table>
(continued on next page)
</Table>
4
<Table>
<Caption>
SUMMARY OF INVESTMENTS BY INDUSTRY CLASSIFICATION AS OF 2/28/05
(continued from previous page)
Refining 0.2
Natural Gas Distributors 0.1
-----
Total Long-Term Investments 96.6%
Short-Term Investments 5.6
Liabilities in Excess of Other Assets (2.2)
-----
Total Net Assets 100.0%
</Table>
Subject to change daily. Provided for informational purposes only and should not
be deemed as a recommendation to buy or sell the securities mentioned or
securities in the industries shown above. Ratings allocations are as a
percentage of long-term investments. Industry allocations are as a percentage of
net assets. Van Kampen is a wholly owned subsidiary of a global securities firm
which is engaged in a wide range of financial services including, for example,
securities trading and brokerage activities, investment banking, research and
analysis, financing and financial advisory services. Ratings allocations based
upon ratings as issued by Standard and Poor's and Moody's, respectively.
5
FOR MORE INFORMATION ABOUT PORTFOLIO HOLDINGS
Each Van Kampen fund provides a complete schedule of portfolio holdings
in its semiannual and annual reports within 60 days of the end of the
fund's second and fourth fiscal quarters by filing the schedule
electronically with the Securities and Exchange Commission (SEC). The
semiannual reports are filed on Form N-CSRS and the annual reports are
filed on Form N-CSR. Van Kampen also delivers the semiannual and annual
reports to fund shareholders, and makes these reports available on its
public web site, www.vankampen.com. In addition to the semiannual and
annual reports that Van Kampen delivers to shareholders and makes
available through the Van Kampen public web site, each fund files a
complete schedule of portfolio holdings with the SEC for the fund's first
and third fiscal quarters on Form N-Q. Van Kampen does not deliver the
reports for the first and third fiscal quarters to shareholders, nor are
the reports posted to the Van Kampen public web site. You may, however,
obtain the Form N-Q filings (as well as the Form N-CSR and N-CSRS
filings) by accessing the SEC's web site, http://www.sec.gov. You may
also review and copy them at the SEC's Public Reference Room in
Washington, DC. Information on the operation of the SEC's Public
Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. You
can also request copies of these materials, upon payment of a duplicating
fee, by electronic request at the SEC's e-mail address
(publicinfo@sec.gov) or by writing the Public Reference section of the
SEC, Washington, DC 20549-0102.
You may obtain copies of a fund's fiscal quarter filings by contacting
Van Kampen Client Relations at 1-800-847-2424.
HOUSEHOLDING NOTICE
To reduce fund expenses, the fund attempts to eliminate duplicate
mailings to the same address. The fund delivers a single copy of certain
shareholder documents to investors who share an address, even if the
accounts are registered under different names. The fund's prospectuses
and shareholder reports (including annual privacy notices) will be
delivered to you in this manner indefinitely unless you instruct us
otherwise. You can request multiple copies of these documents by either
calling 1-800-341-2911 or writing to Van Kampen Investor Services at 1
Parkview Plaza, P.O. Box 5555, Oakbrook Terrace, IL 60181. Once Investor
Services has received your instructions, we will begin sending individual
copies for each account within 30 days.
6
PROXY VOTING POLICIES AND PROCEDURES AND PROXY VOTING RECORD
The fund's policies and procedures with respect to the voting of proxies
relating to the fund's portfolio securities and information on how the
fund voted proxies relating to portfolio securities during the most
recent twelve-month period ended June 30 is available without charge,
upon request, by calling 1-800-847-2424 or by visiting our website at
www.vankampen.com. This information is also available on the Securities
and Exchange Commission's website at http://www.sec.gov.
7
Expense Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction
cost, including sales charges (loads) on purchase payments of Class A Shares and
contingent deferred sales charge on redemptions of Class B and C Shares; and (2)
ongoing costs, including management fees; distribution and service (12b-1) fees;
and other Fund expenses. This example is intended to help you understand your
ongoing cost (in dollars) of investing in the Fund and to compare these costs
with the ongoing costs of investing in other mutual funds.
The example is based on an investment of $1,000 invested at the beginning of the
period and held for the entire period 09/01/04 - 02/28/05.
ACTUAL EXPENSE
The first line of the table below provides information about actual account
values and actual expenses. You may use the information in this line, together
with the amount you invested, to estimate the expenses that you paid over the
period. Simply divide your account value by $1,000 (for example, and $8,600
account value divided by $1,000 = 8.6), then multiply the result by the number
in the first line under the heading entitled "Expenses Paid During Period" to
estimate the expenses you paid on your account during this period.
HYPOTHETICAL EXAMPLE FOR COMPARISON PURPOSES
The second line of the table below provides information about hypothetical
expenses based on the Fund's actual expense ratio and an assumed rate of return
of 5% per year before expenses, which is not the Fund's actual return. The
hypothetical account values and expenses may not be used to estimate the actual
ending account balance or expenses you paid for the period. You may use this
information to compare the ongoing cost of investing in the Fund and other
funds. To do so, compare this 5% hypothetical example with the 5% hypothetical
examples that appear in the shareholder reports of the other funds.
Please note that the expenses shown in the table are meant to highlight your
ongoing costs only and do not reflect any transactional costs, such as sales
charges (loads) or contingent deferred sales charges. Therefore, the second line
of the table is useful in comparing ongoing costs only, and will not help you
determine the relative total costs of owning different funds. In addition, if
these transactional costs were included, your costs would have been higher.
<Table>
<Caption>
BEGINNING ENDING EXPENSES PAID
ACCOUNT VALUE ACCOUNT VALUE DURING PERIOD*
------------------------------------------------
9/1/04 2/28/05 9/1/04-2/28/05
Class A
Actual...................................... $1,000.00 $1,029.25 $4.78
Hypothetical................................ 1,000.00 1,020.09 4.76
(5% annual return before expenses)
Class B
Actual...................................... 1,000.00 1,025.50 8.59
Hypothetical................................ 1,000.00 1,016.29 8.55
(5% annual return before expenses)
Class C
Actual...................................... 1,000.00 1,025.50 8.19
Hypothetical................................ 1,000.00 1,016.69 8.15
(5% annual return before expenses)
</Table>
* Expenses are equal to the Fund's annualized expense ratio of 0.95%, 1.71%,
and 1.63% for Class A, B, and C Shares, respectively, multiplied by the
average account value over the period, multiplied by 181/365 (to reflect the
one-half year period).
Assumes all dividends and distributions were reinvested.
8
VAN KAMPEN CORPORATE BOND FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2005 (UNAUDITED)
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
CORPORATE BONDS 81.7%
AEROSPACE & DEFENSE 0.6%
$ 992 Raytheon Co. ............................... 4.500% 11/15/07 $ 1,008,760
1,960 Raytheon Co. ............................... 8.300 03/01/10 2,276,989
275 Raytheon Co. ............................... 4.850 01/15/11 277,320
------------
3,563,069
------------
AUTOMOTIVE 5.9%
1,035 AutoNation, Inc. ........................... 9.000 08/01/08 1,174,725
945 DaimlerChrysler NA Holding Corp. ........... 7.300 01/15/12 1,060,883
2,915 DaimlerChrysler NA Holding Corp. ........... 8.500 01/18/31 3,725,842
355 Ford Motor Credit Co. ...................... 7.375 10/28/09 372,549
6,880 Ford Motor Credit Co. ...................... 7.250 10/25/11 7,173,198
1,380 General Motors Acceptance Corp. ............ 4.500 07/15/06 1,378,445
10,985 General Motors Acceptance Corp. ............ 6.875 09/15/11 10,906,556
5,050 General Motors Acceptance Corp. ............ 8.000 11/01/31 5,079,719
4,300 General Motors Corp. ....................... 8.375 07/15/33 4,235,208
------------
35,107,125
------------
BANKING 12.9%
5,120 Bank of America Corp. ...................... 3.375 02/17/09 4,957,696
6,000 Bank of Scotland 144A-Private Placement
(United Kingdom) (a)........................ 3.500 11/30/07 5,902,386
1,945 Citigroup, Inc. ............................ 6.000 02/21/12 2,094,938
5,015 Citigroup, Inc. ............................ 5.625 08/27/12 5,289,972
160 Citigroup, Inc. ............................ 6.625 06/15/32 183,147
5,355 JPMorgan Chase & Co. ....................... 6.750 02/01/11 5,936,676
5,920 Key Corp. .................................. 6.750 03/15/06 6,092,006
6,010 Marshall & Ilsley Bank...................... 3.800 02/08/08 5,945,579
905 MBNA America Bank NA........................ 7.125 11/15/12 1,022,666
4,350 MBNA Corp. ................................. 6.125 03/01/13 4,650,037
6,160 National City Bank.......................... 3.375 10/15/07 6,062,019
5,855 SunTrust Banks, Inc. ....................... 5.050 07/01/07 5,980,156
6,000 U S BanCorp. ............................... 3.950 08/23/07 5,996,676
2,890 Wachovia Corp. ............................. 4.950 11/01/06 2,941,954
3,100 Wachovia Corp. ............................. 3.625 02/17/09 3,027,426
2,960 Washington Mutual, Inc. .................... 8.250 04/01/10 3,402,665
1,690 Washington Mutual, Inc. .................... 5.500 01/15/13 1,750,595
5,820 Wells Fargo & Co. .......................... 5.125 02/15/07 5,953,860
------------
77,190,454
------------
BROKERAGE 1.2%
2,930 Goldman Sachs Group, Inc. .................. 6.875 01/15/11 3,264,052
380 Goldman Sachs Group, Inc. .................. 6.600 01/15/12 420,364
1,560 Goldman Sachs Group, Inc. .................. 5.250 10/15/13 1,589,529
2,000 Lehman Brothers Holdings, Inc. ............. 8.500 05/01/07 2,188,054
------------
7,461,999
------------
</Table>
See Notes to Financial Statements 9
VAN KAMPEN CORPORATE BOND FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2005 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
CHEMICALS 0.8%
$ 120 FMC Corp. .................................. 10.250% 11/01/09 $ 136,500
1,420 ICI Wilmington, Inc. ....................... 4.375 12/01/08 1,415,206
3,280 Sealed Air Corp., 144A-Private Placement
(a)......................................... 5.625 07/15/13 3,383,474
------------
4,935,180
------------
CONSTRUCTION MACHINERY 0.9%
5,210 Caterpillar Financial Services Corp., Ser
F........................................... 3.625 11/15/07 5,146,735
------------
CONSUMER PRODUCTS 0.7%
4,060 Clorox Co., 144A-Private Placement (Variable
Rate Coupon) (a)............................ 2.544 12/14/07 4,063,496
------------
DIVERSIFIED MANUFACTURING 1.2%
2,260 Cooper Industries, Inc. .................... 5.250 07/01/07 2,311,860
1,450 Hutchison Whampoa International Ltd., 144A-
Private Placement (Cayman Islands) (a)...... 5.450 11/24/10 1,496,944
2,540 Hutchison Whampoa International Ltd., 144A-
Private Placement (Cayman Islands) (a)...... 6.500 02/13/13 2,740,739
475 Tyco International Group SA (Luxembourg).... 5.800 08/01/06 486,548
------------
7,036,091
------------
ELECTRIC 9.6%
2,325 Arizona Public Service Co. ................. 6.750 11/15/06 2,424,489
3,145 Arizona Public Service Co. ................. 5.800 06/30/14 3,336,703
2,155 Carolina Power & Light Co. ................. 6.800 08/15/07 2,285,436
695 CC Funding Trust I.......................... 6.900 02/16/07 730,890
825 Centerpoint Energy.......................... 7.750 02/15/11 948,080
1,560 Cincinnati Gas & Electric Co. .............. 5.700 09/15/12 1,639,401
1,495 Detroit Edison Co. ......................... 6.125 10/01/10 1,608,260
1,980 Detroit Edison Co., 144A-Private Placement
(a)......................................... 4.800 02/15/15 1,948,591
1,640 Duquesne Light Co., Ser O................... 6.700 04/15/12 1,822,319
1,580 Entergy Gulf States, Inc. .................. 3.600 06/01/08 1,545,834
4,395 Entergy Gulf States, Inc. (Variable
Rate Coupon)................................ 2.800 12/01/09 4,398,648
3,835 Exelon Corp. ............................... 6.750 05/01/11 4,237,211
3,415 FPL Group Capital, Inc. .................... 3.250 04/11/06 3,399,404
560 Indianapolis Power & Light Co., 144A-Private
Placement (a)............................... 6.300 07/01/13 595,943
1,245 Monongahela Power Co. ...................... 5.000 10/01/06 1,264,340
910 Nevada Power Co. ........................... 9.000 08/15/13 1,055,600
2,457 Niagara Mohawk Power Corp., Ser F........... 7.625 10/01/05 2,515,763
2,450 Nisource Finance Corp. ..................... 7.625 11/15/05 2,518,272
2,300 Nisource Finance Corp. (Variable
Rate Coupon)................................ 3.430 11/23/09 2,310,120
4,470 Ohio Edison Co. ............................ 5.450 05/01/15 4,537,957
2,975 Pacific Gas & Electric Co. ................. 6.050 03/01/34 3,147,258
590 PSEG Energy Holdings........................ 7.750 04/16/07 623,925
1,400 PSEG Energy Holdings........................ 8.625 02/15/08 1,529,500
</Table>
10 See Notes to Financial Statements
VAN KAMPEN CORPORATE BOND FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2005 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
ELECTRIC (CONTINUED)
$1,200 Reliant Energy, Inc. ....................... 6.750% 12/15/14 $ 1,197,000
440 Southern CA Edison Co. ..................... 5.000 01/15/14 442,039
845 Texas-New Mexico Power Co. ................. 6.250 01/15/09 880,633
590 TXU Corp., Ser J............................ 6.375 06/15/06 607,292
1,815 TXU Energy Co. ............................. 7.000 03/15/13 2,035,617
1,445 Wisconsin Electric Power.................... 3.500 12/01/07 1,422,168
140 Wisconsin Electric Power.................... 5.625 05/15/33 145,518
------------
57,154,211
------------
ENTERTAINMENT 1.4%
1,385 Park Place Entertainment Corp. ............. 7.500 09/01/09 1,542,544
400 Time Warner, Inc. .......................... 6.875 05/01/12 448,889
650 Time Warner, Inc. .......................... 6.625 05/15/29 711,843
3,090 Time Warner, Inc. .......................... 7.625 04/15/31 3,779,991
1,725 Time Warner, Inc. .......................... 7.700 05/01/32 2,133,837
------------
8,617,104
------------
ENVIRONMENTAL SERVICES 0.5%
1,220 Waste Management, Inc. ..................... 7.000 10/15/06 1,277,644
1,745 Waste Management, Inc. ..................... 7.375 08/01/10 1,964,130
------------
3,241,774
------------
FOOD/BEVERAGE 2.5%
3,145 Kraft Foods, Inc. .......................... 5.625 11/01/11 3,313,412
1,260 Kraft Foods, Inc. .......................... 6.250 06/01/12 1,374,518
5,800 Miller Brewing Co., 144A-Private
Placement (a)............................... 4.250 08/15/08 5,789,798
610 Smithfield Foods, Inc. ..................... 7.000 08/01/11 658,800
2,970 Smithfield Foods, Inc., Ser B............... 8.000 10/15/09 3,304,125
295 Smithfield Foods, Inc., Ser B............... 7.750 05/15/13 332,244
------------
14,772,897
------------
GAMING 1.1%
2,840 MGM Mirage, Inc. ........................... 8.500 09/15/10 3,258,900
1,400 MGM Mirage, Inc. ........................... 6.750 09/01/12 1,487,500
1,615 Station Casinos, Inc. ...................... 6.000 04/01/12 1,681,619
------------
6,428,019
------------
HEALTHCARE 4.4%
4,835 Aetna, Inc. ................................ 7.375 03/01/06 4,999,003
1,675 Aetna, Inc. ................................ 7.875 03/01/11 1,939,102
670 AmerisourceBergen Corp. .................... 8.125 09/01/08 740,350
1,055 Fisher Scientific International, Inc.,
144A-Private Placement (a).................. 6.750 08/15/14 1,118,300
465 HCA, Inc. .................................. 7.875 02/01/11 515,264
2,055 HCA, Inc. .................................. 6.300 10/01/12 2,101,124
365 HCA, Inc. .................................. 9.000 12/15/14 436,186
1,010 HCA, Inc. .................................. 7.190 11/15/15 1,071,319
4,700 Health Net, Inc. ........................... 9.875 04/15/11 5,629,773
</Table>
See Notes to Financial Statements 11
VAN KAMPEN CORPORATE BOND FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2005 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
HEALTHCARE (CONTINUED)
$1,435 Tenet Healthcare Corp. ..................... 7.375% 02/01/13 $ 1,366,837
1,360 Tenet Healthcare Corp. ..................... 6.875 11/15/31 1,152,600
1,840 UnitedHealth Group, Inc. ................... 5.200 01/17/07 1,879,613
1,665 WellPoint, Inc., 144A-Private Placement
(a)......................................... 3.750 12/14/07 1,641,971
1,510 WellPoint, Inc., 144A-Private Placement
(a)......................................... 4.250 12/15/09 1,489,665
------------
26,081,107
------------
INDEPENDENT ENERGY 0.5%
1,550 Kerr-McGee Corp. ........................... 5.875 09/15/06 1,592,844
1,540 Kerr-McGee Corp. ........................... 6.625 10/15/07 1,623,822
------------
3,216,666
------------
INTEGRATED ENERGY 4.0%
4,520 Amerada Hess Corp. ......................... 7.875 10/01/29 5,584,880
1,870 Conoco Funding Co. (Canada)................. 6.350 10/15/11 2,063,147
475 Consumers Energy Co., Ser B................. 5.375 04/15/13 487,566
1,880 Consumers Energy Co., Ser F................. 4.000 05/15/10 1,819,804
795 Consumers Energy Co., Ser H................. 4.800 02/17/09 803,251
1,175 Marathon Oil Corp. ......................... 5.375 06/01/07 1,206,435
995 Pemex Project Funding Master Trust.......... 9.125 10/13/10 1,184,050
3,410 Pemex Project Funding Master Trust.......... 8.000 11/15/11 3,904,450
3,400 Pemex Project Funding Master Trust.......... 7.375 12/15/14 3,782,500
1,035 Pemex Project Funding Master Trust.......... 8.625 02/01/22 1,244,587
150 Petro-Canada (Canada)....................... 4.000 07/15/13 139,508
1,905 Petro-Canada (Canada)....................... 5.350 07/15/33 1,798,370
------------
24,018,548
------------
LIFE INSURANCE 1.5%
830 Equitable Cos., Inc. ....................... 6.500 04/01/08 884,014
6,210 Marsh & McLennan Cos., Inc. ................ 5.875 08/01/33 5,890,011
190 Metlife, Inc. .............................. 6.125 12/01/11 205,316
920 Nationwide Financial Services, Inc. ........ 6.250 11/15/11 1,003,934
740 Prudential Hldgs, LLC, Ser B, 144A-Private
Placement (a)............................... 7.245 12/18/23 888,548
------------
8,871,823
------------
LODGING 1.5%
2,360 Hyatt Equities, LLC, 144A-Private
Placement (a)............................... 6.875 06/15/07 2,450,346
1,080 Marriott International, Ser D............... 8.125 04/01/05 1,084,009
1,085 Marriott International, Ser E............... 7.000 01/15/08 1,164,191
1,005 Starwood Hotels & Resorts Worldwide,
Inc. ....................................... 7.375 05/01/07 1,072,837
2,610 Starwood Hotels & Resorts Worldwide,
Inc. ....................................... 7.875 05/01/12 3,034,125
------------
8,805,508
------------
MEDIA-CABLE 1.9%
1,805 Comcast Cable Communications, Inc. ......... 8.375 05/01/07 1,961,936
2,345 Comcast Cable Communications, Inc. ......... 6.750 01/30/11 2,591,136
240 Comcast Cable Communications, Inc. ......... 7.125 06/15/13 274,499
1,755 Comcast Corp. .............................. 6.500 01/15/15 1,935,776
</Table>
12 See Notes to Financial Statements
VAN KAMPEN CORPORATE BOND FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2005 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
MEDIA-CABLE (CONTINUED)
$2,795 Cox Communications, Inc.,144A-Private
Placement (a)............................... 4.625% 01/15/10 $ 2,764,708
2,095 Echostar DBS Corp. ......................... 6.375 10/01/11 2,168,325
------------
11,696,380
------------
MEDIA-NONCABLE 3.0%
2,500 Clear Channel Communications, Inc. ......... 7.250 10/15/27 2,757,645
2,415 Interpublic Group Co., Inc. ................ 5.400 11/15/09 2,435,308
3,000 News America Holdings, Inc. ................ 8.875 04/26/23 3,958,530
510 News America, Inc. ......................... 7.125 04/08/28 582,295
2,135 News America, Inc. ......................... 7.300 04/30/28 2,481,656
1,650 News America, Inc. ......................... 7.280 06/30/28 1,912,767
360 News America, Inc.,
144A-Private Placement (a).................. 5.300 12/15/14 363,068
3,150 WPP Finance Corp., 144A-Private Placement
(United Kingdom) (a)........................ 5.875 06/15/14 3,296,450
------------
17,787,719
------------
NATURAL GAS DISTRIBUTORS 0.1%
685 Sempra Energy............................... 4.621 05/17/07 691,284
------------
NATURAL GAS PIPELINES 1.8%
735 Consolidated Natural Gas Co. ............... 5.000 03/01/14 733,207
2,460 Consolidated Natural Gas Co., Ser A......... 5.000 12/01/14 2,453,429
2,485 Consolidated Natural Gas Co., Ser C......... 6.250 11/01/11 2,694,938
490 Northwest Pipeline Corp. ................... 8.125 03/01/10 540,837
2,115 Ras Laffan Liquefied Natural Gas Co., Ltd.,
144A-Private Placement (Qatar) (a).......... 8.294 03/15/14 2,486,536
1,470 Texas Eastern Transmission Corp. ........... 7.000 07/15/32 1,713,763
------------
10,622,710
------------
NONCAPTIVE-CONSUMER FINANCE 4.5%
4,660 American Express Co. ....................... 5.500 09/12/06 4,782,213
1,225 American General Finance Corp. ............. 4.625 05/15/09 1,232,769
4,500 American General Finance Corp. ............. 4.625 09/01/10 4,489,146
5,545 Countrywide Home Loans, Inc. ............... 3.250 05/21/08 5,363,174
1,000 HSBC Finance Corp. ......................... 7.875 03/01/07 1,073,465
800 HSBC Finance Corp. ......................... 4.125 12/15/08 794,427
1,175 HSBC Finance Corp. ......................... 4.125 11/16/09 1,157,042
4,040 HSBC Finance Corp. ......................... 6.750 05/15/11 4,463,958
3,400 SLM Corp. .................................. 4.000 01/15/10 3,319,383
------------
26,675,577
------------
NONCAPTIVE-DIVERSIFIED FINANCE 1.7%
1,165 CIT Group, Inc. ............................ 7.375 04/02/07 1,242,060
940 CIT Group, Inc. ............................ 3.650 11/23/07 924,651
2,235 General Electric Capital Corp. ............. 4.750 09/15/14 2,221,206
</Table>
See Notes to Financial Statements 13
VAN KAMPEN CORPORATE BOND FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2005 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
NONCAPTIVE-DIVERSIFIED FINANCE (CONTINUED)
$3,845 General Electric Capital Corp. ............. 6.750% 03/15/32 $ 4,544,617
1,140 Nationwide Building Society, 144A-Private
Placement (United Kingdom) (a).............. 4.250 02/01/10 1,126,791
------------
10,059,325
------------
OIL FIELD SERVICES 0.6%
2,270 Nexen, Inc. (Canada)........................ 5.050 11/20/13 2,246,360
760 Panhandle Eastern Pipe Line Co. ............ 2.750 03/15/07 739,551
345 Plains E & P Co. ........................... 7.125 06/15/14 382,950
------------
3,368,861
------------
PAPER 2.9%
3,430 Abitibi-Consolidated, Inc. (Canada)......... 8.550 08/01/10 3,661,525
3,475 Abitibi-Consolidated, Inc. (Canada)......... 8.850 08/01/30 3,466,312
6,420 Bowater Canada Finance (Canada)............. 7.950 11/15/11 7,034,253
1,915 Sappi Papier Hldg AG, 144A-Private Placement
(Austria) (a)............................... 6.750 06/15/12 2,094,805
1,100 Weyerhaeuser Co. ........................... 6.000 08/01/06 1,133,333
------------
17,390,228
------------
PHARMACEUTICALS 0.7%
2,000 Abbott Laboratories......................... 5.625 07/01/06 2,049,290
2,000 Eli Lilly & Co. ............................ 5.500 07/15/06 2,049,006
------------
4,098,296
------------
PROPERTY & CASUALTY 3.3%
3,025 AIG Sunamerica Global Financial,
144A-Private Placement (a).................. 6.300 05/10/11 3,246,826
4,710 Farmers Exchange Capital, 144A-Private
Placement (a)............................... 7.050 07/15/28 4,998,125
2,721 Farmers Insurance Exchange Surplus,
144A-Private Placement (a).................. 8.625 05/01/24 3,331,187
575 Hartford Financial Services Group........... 2.375 06/01/06 562,485
4,610 Mantis Reef Ltd., 144A-Private Placement
(Australia) (a)............................. 4.692 11/14/08 4,586,844
845 Nationwide Mutual Insurance Co.,
144A-Private Placement (a).................. 8.250 12/01/31 1,071,663
2,105 Two Rock Pass Through Trust, 144A-Private
Placement (Variable Rate Coupon) (Bermuda)
(a)......................................... 3.714 02/11/49 2,118,304
------------
19,915,434
------------
RAILROADS 1.6%
1,905 Burlington Northern Santa Fe Railway Co. ... 4.575 01/15/21 1,874,332
435 CSX Corp. .................................. 2.750 02/15/06 430,059
935 CSX Corp. .................................. 9.000 08/15/06 998,530
1,500 CSX Corp. .................................. 6.750 03/15/11 1,661,695
445 Norfolk Southern Corp. ..................... 7.350 05/15/07 474,993
4,000 Union Pacific Corp. ........................ 8.350 05/01/25 4,201,004
------------
9,640,613
------------
</Table>
14 See Notes to Financial Statements
VAN KAMPEN CORPORATE BOND FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2005 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
REAL ESTATE INVESTMENT TRUSTS 0.7%
$ 525 EOP Operating LP............................ 4.750% 03/15/14 $ 507,873
1,945 Reckson Operating Partnership............... 5.150 01/15/11 1,953,393
1,345 Rouse Co. .................................. 3.625 03/15/09 1,253,704
545 Rouse Co. .................................. 5.375 11/26/13 519,035
------------
4,234,005
------------
REFINING 0.2%
895 Ashland, Inc. .............................. 7.830 08/15/05 912,331
250 Vintage Petroleum, Inc. .................... 7.875 05/15/11 269,375
------------
1,181,706
------------
RETAIL 1.4%
465 CVS Corp. .................................. 5.625 03/15/06 473,519
800 CVS Corp. .................................. 3.875 11/01/07 793,514
2,000 Federated Department Stores, Inc. .......... 6.625 09/01/08 2,143,522
1,500 Federated Department Stores, Inc. .......... 6.300 04/01/09 1,599,214
2,970 May Department Stores Co. .................. 5.950 11/01/08 3,111,500
------------
8,121,269
------------
TECHNOLOGY 1.1%
1,437 Iron Mountain, Inc. ........................ 7.750 01/15/15 1,469,332
685 Iron Mountain, Inc. ........................ 6.625 01/01/16 643,900
3,115 Xerox Corp. ................................ 7.125 06/15/10 3,379,775
1,060 Xerox Corp. ................................ 6.875 08/15/11 1,139,500
------------
6,632,507
------------
TEXTILE 0.2%
1,260 Mohawk Industries, Inc., Ser D.............. 7.200 04/15/12 1,417,146
------------
TOBACCO 0.8%
2,165 Altria Group, Inc. ......................... 7.000 11/04/13 2,383,407
1,970 Altria Group, Inc. ......................... 7.750 01/15/27 2,308,643
------------
4,692,050
------------
TRANSPORTATION SERVICES 0.4%
2,300 FedEx Corp. ................................ 2.650 04/01/07 2,234,524
------------
WIRELESS COMMUNICATIONS 0.4%
1,690 AT&T Wireless Services, Inc. ............... 7.875 03/01/11 1,963,276
125 AT&T Wireless Services, Inc. ............... 8.750 03/01/31 170,551
525 Rogers Wireless, Inc. (Canada).............. 7.250 12/15/12 570,938
------------
2,704,765
------------
WIRELINE COMMUNICATIONS 3.2%
2,155 AT&T Corp. (Belgium)........................ 9.750 11/15/31 2,750,319
3,400 Deutsche Telekom International Finance
BV (Netherlands)............................ 8.750 06/15/30 4,596,038
1,595 France Telecom SA (Variable Rate
Coupon) (France)............................ 9.250 03/01/31 2,179,917
1,500 Sprint Capital Corp. ....................... 7.125 01/30/06 1,543,596
1,000 Sprint Capital Corp. ....................... 6.125 11/15/08 1,055,786
</Table>
See Notes to Financial Statements 15
VAN KAMPEN CORPORATE BOND FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2005 (UNAUDITED) continued
<Table>
<Caption>
PAR
AMOUNT
(000) DESCRIPTION COUPON MATURITY VALUE
- ----------------------------------------------------------------------------------------------
WIRELINE COMMUNICATIONS (CONTINUED)
$ 710 Sprint Capital Corp. ....................... 8.750% 03/15/32 $ 956,224
1,900 Telecom Italia Capital, (Luxembourg)........ 4.000 11/15/08 1,869,119
2,835 Telecom Italia Capital, 144A Private
Placement (Luxembourg) (a).................. 4.000 01/15/10 2,751,832
1,000 Verizon Communications, Inc. ............... 7.510 04/01/09 1,111,343
265 Verizon New England, Inc. .................. 6.500 09/15/11 288,702
------------
19,102,876
------------
TOTAL CORPORATE BONDS 81.7%................................................... 487,979,081
------------
MORTGAGE BACKED SECURITIES 0.5%
2,102 World Financial Property, 144A-Private
Placement (a)............................... 6.910 09/01/13 2,276,855
846 World Financial Property, 144A-Private
Placement (a)............................... 6.950 09/01/13 916,286
------------
TOTAL MORTGAGE BACKED SECURITIES............................................... 3,193,141
------------
GOVERNMENT OBLIGATIONS 14.0%
2,835 Russian Federation 144A-Private Placement
(a) (b)..................................... 5.000/7.500 03/31/30 2,990,925
2,000 United Mexican States (Mexico).............. 10.375 02/17/09 2,411,000
5,575 United Mexican States (Mexico).............. 8.375 01/14/11 6,500,450
560 United Mexican States (Mexico).............. 8.000 09/24/22 660,800
3,555 United Mexican States (Mexico).............. 8.300 08/15/31 4,294,440
1,000 United States Treasury Bonds................ 6.375 08/15/27 1,215,977
13,850 United States Treasury Bonds................ 6.125 08/15/29 16,517,760
28,900 United States Treasury Bonds (STRIPS) (c)... 0.000 02/15/25 10,892,439
8,775 United States Treasury Bonds (STRIPS) (c)... 0.000 02/15/27 3,065,371
34,950 United States Treasury Notes................ 4.250 08/15/13 34,799,855
------------
TOTAL GOVERNMENT OBLIGATIONS................................................... 83,349,017
------------
ASSET BACKED SECURITIES 0.4%
1,642 Continental Airlines, Inc. ................. 6.900 01/02/18 1,627,014
495 Continental Airlines, Inc. ................. 6.648 03/15/19 477,020
------------
TOTAL ASSET BACKED SECURITIES.................................................. 2,104,034
------------
</Table>
16 See Notes to Financial Statements
VAN KAMPEN CORPORATE BOND FUND
PORTFOLIO OF INVESTMENTS -- FEBRUARY 28, 2005 (UNAUDITED) continued
<Table>
<Caption>
DESCRIPTION VALUE
- --------------------------------------------------------------------------------------------------
TOTAL LONG-TERM INVESTMENTS 96.6%
(Cost $558,156,908).............................................................. $576,625,273
------------
SHORT-TERM INVESTMENTS 5.6%
REPURCHASE AGREEMENT 5.5%
Bank of America Securities LLC ($32,654,000 par collateralized by U.S. Government
obligations in a pooled cash account, interest rate of 2.57%, dated 02/28/05, to
be sold on 03/01/05 at $32,656,331).............................................. 32,654,000
U.S. GOVERNMENT AGENCY OBLIGATIONS 0.1%
United States Treasury Bills ($900,000 par, yielding 2.443%,
03/24/05 maturity) (d)........................................................... 898,597
------------
TOTAL SHORT-TERM INVESTMENTS
(Cost $33,552,910)............................................................... 33,552,597
------------
TOTAL INVESTMENTS 102.2%
(Cost $591,709,818).............................................................. 610,177,870
LIABILITIES IN EXCESS OF OTHER ASSETS (2.2%)...................................... (12,992,306)
------------
NET ASSETS 100.0%................................................................. $597,185,564
============
</Table>
Percentages are calculated as a percentage of net assets.
(a) 144A securities are those which are exempt from registration under Rule 144A
of the Securities Act of 1933, as amended. These securities may only be
resold in transactions exempt from registration which are normally those
transactions with qualified institutional buyers.
(b) Security is a "step-up" bond where the coupon increases or steps up at a
predetermined date.
(c) Interest only strip.
(d) All or a portion of these securities have been physically segregated in
connection with open futures contracts.
See Notes to Financial Statements 17
VAN KAMPEN CORPORATE BOND FUND
FINANCIAL STATEMENTS
Statement of Assets and Liabilities
February 28, 2005 (Unaudited)
<Table>
ASSETS:
Total Investments (Cost $591,709,818)....................... $610,177,870
Cash........................................................ 22,579
Receivables:
Interest.................................................. 8,281,515
Fund Shares Sold.......................................... 3,582,189
Investments Sold.......................................... 3,357,068
Variation Margin on Futures............................... 201,339
Other....................................................... 113,893
------------
Total Assets............................................ 625,736,453
------------
LIABILITIES:
Payables:
Fund Shares Repurchased................................... 15,114,835
Investments Purchased..................................... 12,376,776
Distributor and Affiliates................................ 287,420
Income Distributions...................................... 248,490
Investment Advisory Fee................................... 189,674
Trustees' Deferred Compensation and Retirement Plans........ 170,786
Accrued Expenses............................................ 162,908
------------
Total Liabilities....................................... 28,550,889
------------
NET ASSETS.................................................. $597,185,564
============
NET ASSETS CONSIST OF:
Capital (Par value of $.01 per share with an unlimited
number of shares authorized).............................. $591,412,009
Net Unrealized Appreciation................................. 19,004,639
Accumulated Undistributed Net Investment Income............. (4,017,527)
Accumulated Net Realized Loss............................... (9,213,557)
------------
NET ASSETS.................................................. $597,185,564
============
MAXIMUM OFFERING PRICE PER SHARE:
Class A Shares:
Net asset value and redemption price per share (Based on
net assets of $444,207,226 and 65,859,251 shares of
beneficial interest issued and outstanding)............. $ 6.74
Maximum sales charge (4.75%* of offering price)......... .34
------------
Maximum offering price to public........................ $ 7.08
============
Class B Shares:
Net asset value and offering price per share (Based on
net assets of $124,285,145 and 18,467,424 shares of
beneficial interest issued and outstanding)............. $ 6.73
============
Class C Shares:
Net asset value and offering price per share (Based on
net assets of $28,693,193 and 4,261,991 shares of
beneficial interest issued and outstanding)............. $ 6.73
============
</Table>
* On sales of $100,000 or more, the sales charge will be reduced.
18 See Notes to Financial Statements
VAN KAMPEN CORPORATE BOND FUND
FINANCIAL STATEMENTS continued
Statement of Operations
For the Six Months Ended February 28, 2005 (Unaudited)
<Table>
INVESTMENT INCOME:
Interest.................................................... $15,343,277
Other....................................................... 83,325
-----------
Total Income............................................ 15,426,602
-----------
EXPENSES:
Distribution (12b-1) and Service Fees (Attributed to Classes
A, B and C of $518,638, $624,292 and $130,303,
respectively)............................................. 1,273,233
Investment Advisory Fee..................................... 1,179,917
Shareholder Services........................................ 564,010
Custody..................................................... 33,657
Legal....................................................... 21,287
Trustees' Fees and Related Expenses......................... 15,879
Other....................................................... 213,058
-----------
Total Expenses.......................................... 3,301,041
Less Credits Earned on Cash Balances.................... 10,476
-----------
Net Expenses............................................ 3,290,565
-----------
NET INVESTMENT INCOME....................................... $12,136,037
===========
REALIZED AND UNREALIZED GAIN/LOSS:
Realized Gain/Loss:
Investments............................................... $10,060,917
Futures................................................... (1,579,277)
-----------
Net Realized Gain........................................... 8,481,640
-----------
Unrealized Appreciation/Depreciation:
Beginning of the Period................................... 24,131,475
End of the Period:
Investments............................................. 18,468,052
Futures................................................. 536,587
-----------
19,004,639
-----------
Net Unrealized Depreciation During the Period............... (5,126,836)
-----------
NET REALIZED AND UNREALIZED GAIN............................ $ 3,354,804
===========
NET INCREASE IN NET ASSETS FROM OPERATIONS.................. $15,490,841
===========
</Table>
See Notes to Financial Statements 19
VAN KAMPEN CORPORATE BOND FUND
FINANCIAL STATEMENTS continued
Statements of Changes in Net Assets (Unaudited)
<Table>
<Caption>
FOR THE FOR THE
SIX MONTHS ENDED YEAR ENDED
FEBRUARY 28, 2005 AUGUST 31, 2004
------------------------------------
FROM INVESTMENT ACTIVITIES:
Operations:
Net Investment Income.................................... $ 12,136,037 $ 23,589,120
Net Realized Gain........................................ 8,481,640 7,409,352
Net Unrealized Appreciation/Depreciation During the
Period................................................. (5,126,836) 4,242,092
------------ -------------
Change in Net Assets from Operations..................... 15,490,841 35,240,564
------------ -------------
Distributions from Net Investment Income:
Class A Shares......................................... (10,322,441) (18,155,899)
Class B Shares......................................... (2,612,585) (5,932,410)
Class C Shares......................................... (595,312) (1,295,039)
------------ -------------
(13,530,338) (25,383,348)
------------ -------------
Return of Capital Distribution:
Class A Shares......................................... -0- (148,842)
Class B Shares......................................... -0- (45,956)
Class C Shares......................................... -0- (10,002)
------------ -------------
-0- (204,800)
------------ -------------
Total Distributions...................................... (13,530,338) (25,588,148)
------------ -------------
NET CHANGE IN NET ASSETS FROM INVESTMENT ACTIVITIES...... 1,960,503 9,652,416
------------ -------------
FROM CAPITAL TRANSACTIONS:
Proceeds from Shares Sold................................ 110,307,178 213,332,113
Net Asset Value of Shares Issued Through Dividend
Reinvestment........................................... 11,980,254 21,916,096
Cost of Shares Repurchased............................... (76,905,340) (178,594,538)
------------ -------------
NET CHANGE IN NET ASSETS FROM CAPITAL TRANSACTIONS....... 45,382,092 56,653,671
------------ -------------
TOTAL INCREASE IN NET ASSETS............................. 47,342,595 66,306,087
NET ASSETS:
Beginning of the Period.................................. 549,842,969 483,536,882
------------ -------------
End of the Period (Including accumulated undistributed
net investment income of ($4,017,527) and ($2,623,226),
respectively).......................................... $597,185,564 $ 549,842,969
============ =============
</Table>
20 See Notes to Financial Statements
VAN KAMPEN CORPORATE BOND FUND
FINANCIAL HIGHLIGHTS (UNAUDITED)
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED AUGUST 31,
CLASS A SHARES FEBRUARY 28, --------------------------------------------------
2005 2004 2003 2002 (c) 2001 2000
-----------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD......................... $ 6.72 $ 6.58 $ 6.39 $ 6.75 $ 6.43 $ 6.53
------ ------ ------ ------ ------ ------
Net Investment Income.......... .15 .33 .33(a) .37 .41 .43(a)
Net Realized and Unrealized
Gain/Loss.................... .04 .16 .25 (.33) .33 (.12)
------ ------ ------ ------ ------ ------
Total from
Investment Operations.......... .19 .49 .58 .04 .74 .31
------ ------ ------ ------ ------ ------
Less:
Distributions from Net
Investment Income............ .17 .35 .39 .40 .42 .41
Return of Capital
Distributions................ -0- -0-(d) -0- -0- -0- -0-
------ ------ ------ ------ ------ ------
Total Distributions.............. .17 .35 .39 .40 .42 .41
------ ------ ------ ------ ------ ------
NET ASSET VALUE, END OF THE
PERIOD......................... $ 6.74 $ 6.72 $ 6.58 $ 6.39 $ 6.75 $ 6.43
====== ====== ====== ====== ====== ======
Total Return (b)................. 2.93%* 7.55% 9.20% 0.54% 12.10% 5.01%
Net Assets at End of the Period
(In millions).................. $444.2 $394.7 $318.4 $246.5 $221.4 $167.7
Ratio of Expenses to Average Net
Assets......................... .95% .98% 1.01% 1.03% 1.07% 1.15%
Ratio of Net Investment Income to
Average Net Assets............. 4.43% 4.80% 4.98% 5.48% 6.56% 6.80%
Portfolio Turnover............... 29%* 38% 46% 82% 112% 94%
</Table>
* Non-annualized
(a) Based on average shares outstanding.
(b) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum sales charge of 4.75% or contingent deferred
sales charge (CDSC). On purchases of $1 million or more, a CDSC of 1% may be
imposed on certain redemptions made within eighteen months of purchases.
With respect to shares purchased prior to December 1, 2004, a CDSC of 1% may
be imposed on certain redemptions made within one year of purchase. If the
sales charge was included, total returns would be lower. These returns
include combined Rule 12b-1 fees and service fees of up to .25% and do not
reflect the deduction of taxes that a shareholder would pay on Fund
distributions or the redemption of Fund shares.
(c) As required, effective September 1, 2001, the Fund has adopted the
provisions of the AICPA Audit and Accounting Guide for Investment Companies
and began amortizing premium on fixed income securities. The effect of this
change for the year ended August 31, 2002, was to decrease net investment
income per share by $.03, increase net realized and unrealized gains and
losses per share by $.03 and decrease the Ratio of Net Investment Income to
Average Net Assets by .52%. Per share, ratios and supplemental data for
periods prior to August 31, 2002, have not been restated to reflect this
change in presentation.
(d) Amount is less than $.01.
See Notes to Financial Statements 21
VAN KAMPEN CORPORATE BOND FUND
FINANCIAL HIGHLIGHTS (UNAUDITED) continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
SIX MONTHS
ENDED YEAR ENDED AUGUST 31,
CLASS B SHARES FEBRUARY 28, -------------------------------------------------
2005 2004 2003 2002 (c) 2001 2000
----------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD.......................... $ 6.70 $ 6.57 $ 6.38 $ 6.74 $ 6.42 $6.51
------ ------ ------ ------ ------ -----
Net Investment Income........... .12 .26 .28(a) .32 .37 .39(a)
Net Realized and Unrealized
Gain/Loss..................... .05 .16 .25 (.33) .32 (.12)
------ ------ ------ ------ ------ -----
Total from
Investment Operations........... .17 .42 .53 (.01) .69 .27
------ ------ ------ ------ ------ -----
Less:
Distributions from Net
Investment Income............. .14 .29 .34 .35 .37 .36
Return of Capital
Distributions................. -0- -0-(d) -0- -0- -0- -0-
------ ------ ------ ------ ------ -----
Total Distributions............... .14 .29 .34 .35 .37 .36
------ ------ ------ ------ ------ -----
NET ASSET VALUE, END OF THE
PERIOD.......................... $ 6.73 $ 6.70 $ 6.57 $ 6.38 $ 6.74 $6.42
====== ====== ====== ====== ====== =====
Total Return (b).................. 2.55%* 6.59% 8.38% -0.22% 11.28% 4.34%
Net Assets at End of the Period
(In millions)................... $124.3 $126.5 $135.6 $112.3 $ 93.8 $54.5
Ratio of Expenses to Average Net
Assets.......................... 1.71% 1.75% 1.77% 1.78% 1.82% 1.92%
Ratio of Net Investment Income to
Average Net Assets.............. 3.69% 4.06% 4.23% 4.73% 5.81% 6.03%
Portfolio Turnover................ 29%* 38% 46% 82% 112% 94%
</Table>
* Non-annualized
(a) Based on average shares outstanding.
(b) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum CDSC of 4%, charged on certain redemptions
made within the first and second years of purchase and declining to 0% after
the fifth year. If the sales charge was included, total returns would be
lower. These returns include combined Rule 12b-1 fees and service fees of up
to 1% and do not reflect the deduction of taxes that a shareholder would pay
on Fund distributions or redemption of Fund shares.
(c) As required, effective September 1, 2001, the Fund has adopted the
provisions of the AICPA Audit and Accounting Guide for Investment Companies
and began amortizing premium on fixed income securities. The effect of this
change for the year ended August 31, 2002, was to decrease net investment
income per share by $.03, increase net realized and unrealized gains and
losses per share by $.03 and decrease the Ratio of Net Investment Income to
Average Net Assets by .52%. Per share, ratios and supplemental data for
periods prior to August 31, 2002, have not been restated to reflect this
change in presentation.
(d) Amount is less than $.01.
22 See Notes to Financial Statements
VAN KAMPEN CORPORATE BOND FUND
FINANCIAL HIGHLIGHTS (UNAUDITED) continued
THE FOLLOWING SCHEDULE PRESENTS FINANCIAL HIGHLIGHTS FOR ONE SHARE OF THE FUND
OUTSTANDING THROUGHOUT THE PERIODS INDICATED.
<Table>
<Caption>
SIX
MONTHS
ENDED YEAR ENDED AUGUST 31,
CLASS C SHARES FEBRUARY 28, -----------------------------------------------
2005 2004 2003 2002 (c) 2001 2000
--------------------------------------------------------------
NET ASSET VALUE, BEGINNING OF THE
PERIOD........................... $6.71 $6.57 $6.38 $ 6.74 $ 6.42 $6.51
----- ----- ----- ------ ------ -----
Net Investment Income............ .13 .27 .28(a) .32 .37 .39(a)
Net Realized and Unrealized
Gain/Loss...................... .03 .16 .25 (.33) .32 (.12)
----- ----- ----- ------ ------ -----
Total from Investment Operations... .16 .43 .53 (.01) .69 .27
----- ----- ----- ------ ------ -----
Less:
Distributions from Net Investment
Income......................... .14 .29 .34 .35 .37 .36
Return of Capital
Distributions.................. -0- -0-(e) -0- -0- -0- -0-
----- ----- ----- ------ ------ -----
Total Distributions................ .14 .29 .34 .35 .37 .36
----- ----- ----- ------ ------ -----
NET ASSET VALUE, END OF THE
PERIOD........................... $6.73 $6.71 $6.57 $ 6.38 $ 6.74 $6.42
===== ===== ===== ====== ====== =====
Total Return (b)................... 2.55%*(d) 6.59%(d) 8.38% -0.22% 11.28% 4.34%
Net Assets at End of the Period (In
millions)........................ $28.7 $28.6 $29.6 $ 23.4 $ 18.9 $12.0
Ratio of Expenses to Average Net
Assets........................... 1.63%(d) 1.73%(d) 1.77% 1.78% 1.84% 1.92%
Ratio of Net Investment Income to
Average Net Assets............... 3.77%(d) 4.07%(d) 4.22% 4.73% 5.79% 6.03%
Portfolio Turnover................. 29%* 38% 46% 82% 112% 94%
</Table>
* Non-annualized
(a) Based on average shares outstanding.
(b) Assumes reinvestment of all distributions for the period and does not
include payment of the maximum CDSC of 1%, charged on certain redemptions
made within one year of purchase. If the sales charge was included, total
returns would be lower. These returns include combined Rule 12b-1 fees and
service fees of up to 1% and do not reflect the deduction of taxes that a
shareholder would pay on Fund distributions or the redemption of Fund
shares.
(c) As required, effective September 1, 2001, the Fund has adopted the
provisions of the AICPA Audit and Accounting Guide for Investment Companies
and began amortizing premium on fixed income securities. The effect of this
change for the year ended August 31, 2002, was to decrease net investment
income per share by $.03, increase net realized and unrealized gains and
losses per share by $.03 and decrease the Ratio of Net Investment Income to
Average Net Assets by .52%. Per share, ratios and supplemental data for
periods prior to August 31, 2002, have not been restated to reflect this
change in presentation.
(d) The Total Return, Ratio of Expenses to Average Net Assets and Ratio of Net
Investment Income to Average Net Assets reflect actual 12b-1 fees of less
than 1% (See Footnote 6).
(e) Amount is less than $.01.
See Notes to Financial Statements 23
VAN KAMPEN CORPORATE BOND FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2005 (UNAUDITED)
1. SIGNIFICANT ACCOUNTING POLICIES
Van Kampen Corporate Bond Fund (the "Fund") is organized as a Delaware statutory
trust, and is registered as a diversified open-end management investment company
under the Investment Company Act of 1940 (the "1940 Act"), as amended. The
Fund's primary investment objective is to seek to provide current income with
preservation of capital. The Fund commenced investment operations on September
23, 1971. The distribution of the Fund's Class B and Class C Shares commenced on
September 28, 1992 and August 30, 1993, respectively. The Fund registered Class
I shares on September 1, 2004. There were no sales of Class I shares for the
period ended February 28, 2005.
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. The
preparation of financial statements in conformity with U.S. generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
A. SECURITY VALUATION Fixed income investments are stated at value using market
quotations or indications of value obtained from an independent pricing service.
Investments in securities listed on a securities exchange are valued at their
last sale price as of the close of such securities exchange. Listed and unlisted
securities for which the last sales price is not available are valued at the
mean of the bid and asked prices. For those securities where quotations or
prices are not available as noted above, valuations are determined in accordance
with procedures established in good faith by the Board of Trustees. Futures
contracts are valued at the settlement price established each day on the
exchange in which they are traded. Short-term securities with remaining
maturities of 60 days or less are valued at amortized cost, which approximates
market value.
B. SECURITY TRANSACTIONS Security transactions are recorded on a trade date
basis. Realized gains and losses are determined on an identified cost basis.
The Fund invests in repurchase agreements, which are short-term investments
in which the Fund acquires ownership of a debt security and the seller agrees to
repurchase the security at a future time and specified price. The Fund may
invest independently in repurchase agreements, or transfer uninvested cash
balances into a pooled cash account along with other investment companies
advised by Van Kampen Asset Management (the "Adviser") or its affiliates, the
daily aggregate of which is invested in repurchase agreements. Repurchase
agreements are fully collateralized by the underlying debt security. The Fund
will make payment for such securities only upon physical delivery or evidence of
book entry transfer to the account of the custodian bank. The seller is required
to maintain the value of the underlying security at not less than the repurchase
proceeds due the Fund.
C. INCOME AND EXPENSES Interest income is recorded on an accrual basis.
Discounts on debt securities purchased are accreted and premiums are amortized
over the expected life of each applicable security. Income and expenses of the
Fund are allocated on a pro rata basis to each class of shares, except for
distribution and service fees and incremental transfer agency costs which are
unique to each class of shares.
24
VAN KAMPEN CORPORATE BOND FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2005 (UNAUDITED) continued
D. FEDERAL INCOME TAXES It is the Fund's policy to comply with the requirements
of Subchapter M of the Internal Revenue Code applicable to regulated investment
companies and to distribute substantially all of its taxable income to its
shareholders. Therefore, no provision for federal income taxes is required.
The Fund intends to utilize provisions of the federal income tax laws which
allow it to carry a realized capital loss forward for eight years following the
year of the loss and offset these losses against any future realized capital
gains. At August 31, 2004, the Fund had an accumulated capital loss carryforward
for tax purposes of $18,983,081 which will expire according to the following
schedule:
<Table>
<Caption>
AMOUNT EXPIRATION
$ 831,968................................................. August 31, 2008
5,631,520................................................. August 31, 2009
12,083,022................................................. August 31, 2011
436,571................................................. August 31, 2012
</Table>
At February 28, 2005, the cost and related gross unrealized appreciation and
depreciation are as follows:
<Table>
Cost of investments for tax purposes........................ $593,900,954
============
Gross tax unrealized appreciation........................... $ 20,780,638
Gross tax unrealized depreciation........................... (4,503,722)
------------
Net tax unrealized appreciation on investments.............. $ 16,276,916
============
</Table>
E. DISTRIBUTION OF INCOME AND GAINS The Fund declares daily and pays monthly
dividends from net investment income. Net realized gains, if any, are
distributed annually. Distributions from net realized gains for book purposes
may include short-term capital gains and gains on future transactions. All
short-term capital gains and a portion of future gains are included in ordinary
income for tax purposes.
The tax character of distributions paid during the fiscal year ended August
31, 2004 was as follows:
<Table>
<Caption>
2004
Distribution paid from:
Ordinary Income........................................... $25,453,701
Long-term capital gain.................................... --
Return of Capital......................................... 204,800
-----------
$25,658,501
===========
</Table>
Net realized gains or losses may differ for financial and tax reporting
purposes as a result of the deferral of losses relating to wash sale
transactions.
F. EXPENSE REDUCTIONS During the six months ended February 28, 2005, the Fund's
custody fee was reduced by $10,476 as a result of credits earned on cash
balances.
25
VAN KAMPEN CORPORATE BOND FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2005 (UNAUDITED) continued
2. INVESTMENT ADVISORY AGREEMENT AND OTHER TRANSACTIONS WITH AFFILIATES
Under the terms of the Fund's Investment Advisory Agreement, the Adviser will
provide investment advice and facilities to the Fund for an annual fee payable
monthly as follows:
<Table>
<Caption>
AVERAGE DAILY NET ASSETS % PER ANNUM
First $500 million.......................................... .42%
Next $750 million........................................... .35%
Over $1.250 billion......................................... .22%
</Table>
Effective November 1, 2004, the management fee was reduced from .50% for the
first $150 million, .45% for the next $100 million, .40% for the next $100
million, and .35% for any average daily net assets greater than $350 million.
For the six months ended February 28, 2005, the Fund recognized expenses of
approximately $21,300 representing legal services provided by Skadden, Arps,
Slate, Meagher & Flom LLP, counsel to the Fund, of which a Trustee of the Fund
is a partner of such firm and he and his law firm provide legal services as
legal counsel to the Fund.
Under an Accounting Services agreement, the Adviser provides accounting
services to the Fund. The Adviser allocates the cost of such services to each
fund. For the six months ended February 28, 2005, the Fund recognized expenses
of approximately $17,100 representing Van Kampen Investments Inc.'s or its
affiliates (collectively "Van Kampen") cost of providing accounting services to
the Fund, which are reported as part of "Other" expenses in the Statement of
Operations.
Van Kampen Investor Services Inc. (VKIS), an affiliate of the Adviser,
serves as the shareholder servicing agent for the Fund. For the six months ended
February 28, 2005, the Fund recognized expenses of approximately $474,800
representing transfer agency fees paid to VKIS. Transfer agency fees are
determined through negotiations with the Fund's Board of Trustees.
Certain officers and trustees of the Fund are also officers and directors of
Van Kampen. The Fund does not compensate its officers or trustees who are also
officers of Van Kampen.
The Fund provides deferred compensation and retirement plans for its
trustees who are not officers of Van Kampen. Under the deferred compensation
plan, trustees may elect to defer all or a portion of their compensation.
Amounts deferred are retained by the Fund and, to the extent permitted by the
1940 Act, as amended, may be invested in the common shares of those funds
selected by the trustees. Investments in such funds of approximately $77,800 are
included in "Other" assets on the Statement of Assets and Liabilities at
February 28, 2005. Appreciation/depreciation and distributions received from
these investments are recorded with an offsetting increase/decrease in the
deferred compensation obligation and do not affect the net asset value of the
Fund. Benefits under the retirement plan are payable upon retirement for a
ten-year period and are based upon each trustee's years of service to the Fund.
The maximum annual benefit per trustee under the plan is $2,500.
26
VAN KAMPEN CORPORATE BOND FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2005 (UNAUDITED) continued
3. CAPITAL TRANSACTIONS
At February 28, 2005, capital aggregated $442,736,297, $120,579,161 and
$28,096,551 for Classes A, B and C, respectively. For the six months ended
February 28, 2005, transactions were as follows:
<Table>
<Caption>
SHARES VALUE
Sales:
Class A................................................... 13,877,209 $ 93,840,219
Class B................................................... 1,866,907 12,594,068
Class C................................................... 573,987 3,872,891
----------- ------------
Total Sales................................................. 16,318,103 $110,307,178
=========== ============
Dividend Reinvestment:
Class A................................................... 1,380,904 $ 9,328,218
Class B................................................... 327,759 2,208,502
Class C................................................... 65,824 443,534
----------- ------------
Total Dividend Reinvestment................................. 1,774,487 $ 11,980,254
=========== ============
Repurchases:
Class A................................................... (8,136,674) $(54,984,506)
Class B................................................... (2,600,245) (17,537,692)
Class C................................................... (650,105) (4,383,142)
----------- ------------
Total Repurchases........................................... (11,387,024) $(76,905,340)
=========== ============
</Table>
At August 31, 2004, capital aggregated $394,552,366, $123,314,283 and
$28,163,268 for Classes A, B and C, respectively. For the year ended August 31,
2004, transactions were as follows:
<Table>
<Caption>
SHARES VALUE
Sales:
Class A................................................... 25,621,755 $ 171,882,313
Class B................................................... 4,692,580 31,438,594
Class C................................................... 1,492,686 10,011,206
----------- -------------
Total Sales................................................. 31,807,021 $ 213,332,113
=========== =============
Dividend Reinvestment:
Class A................................................... 2,402,750 $ 16,118,720
Class B................................................... 721,928 4,835,848
Class C................................................... 143,536 961,528
----------- -------------
Total Dividend Reinvestment................................. 3,268,214 $ 21,916,096
=========== =============
Repurchases:
Class A................................................... (17,650,117) $(118,163,230)
Class B................................................... (7,184,406) (47,954,023)
Class C................................................... (1,866,395) (12,477,285)
----------- -------------
Total Repurchases........................................... (26,700,918) $(178,594,538)
=========== =============
</Table>
27
VAN KAMPEN CORPORATE BOND FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2005 (UNAUDITED) continued
Class B Shares purchased on or after June 1, 1996, and any dividend
reinvestment Class B Shares received on such shares, automatically convert to
Class A Shares eight years after the end of the calendar month in which the
shares were purchased. Class B Shares purchased before June 1, 1996, and any
dividend reinvestment plan Class B Shares received on such shares, automatically
convert to Class A Shares six years after the end of the calendar month in which
the shares were purchased. For the six months ended February 28, 2005 and the
year ended August 31, 2004, 587,699 and 618,613 Class B Shares automatically
converted to Class A Shares, respectively, and are shown in the above tables as
sales of Class A Shares and repurchases of Class B Shares. Class C Shares
purchased before January 1, 1997, and any dividend reinvestment plan Class C
Shares received on such shares, automatically convert to Class A Shares ten
years after the end of the calendar month in which the shares were purchased.
Class C Shares purchased on or after January 1, 1997 do not possess a conversion
feature. For the six months ended February 28, 2005 and the year ended August
31, 2004, 31,491 and 0 Class C Shares converted to Class A Shares, respectively,
and are shown in the above tables as sales of Class A shares and repurchases of
Class C shares. Class B and C Shares are offered without a front end sales
charge, but are subject to a contingent deferred sales charge (CDSC). The CDSC
will be imposed on most redemptions made within five years of the purchase for
Class B and one year of the purchase for Class C as detailed in the following
schedule.
<Table>
<Caption>
CONTINGENT DEFERRED
SALES CHARGE
AS A PERCENTAGE
OF DOLLAR AMOUNT
SUBJECT TO CHARGE
--------------------------
YEAR OF REDEMPTION CLASS B CLASS C
First....................................................... 4.00% 1.00%
Second...................................................... 4.00% None
Third....................................................... 3.00% None
Fourth...................................................... 2.50% None
Fifth....................................................... 1.50% None
Sixth and Thereafter........................................ None None
</Table>
For the six months ended February 28, 2005, Van Kampen, as Distributor for
the Fund, received commissions on sales of the Fund's Class A Shares of
approximately $275,500 and CDSC on redeemed shares of approximately $126,700.
Sales charges do not represent expenses of the Fund.
4. INVESTMENT TRANSACTIONS
During the period, the cost of purchases and proceeds from sales of investments,
excluding short-term investments, were $223,541,553 and $151,085,671,
respectively.
5. DERIVATIVE FINANCIAL INSTRUMENTS
A derivative financial instrument in very general terms refers to a security
whose value is "derived" from the value of an underlying asset, reference rate
or index.
The Fund has a variety of reasons to use derivative instruments, such as to
attempt to protect the Fund against possible changes in the market value of its
portfolio or to generate
28
VAN KAMPEN CORPORATE BOND FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2005 (UNAUDITED) continued
potential gain. All of the Fund's portfolio holdings, including derivative
instruments, are marked to market each day with the change in value reflected in
unrealized appreciation/depreciation. Upon disposition, a realized gain or loss
is recognized accordingly, except when taking delivery of a security underlying
a futures contract. In this instance, the recognition of gain or loss is
postponed until the disposal of the security underlying the futures contract.
Risk may arise as a result of the potential inability of the counterparties to
meet the terms of their contracts.
During the period, the Fund invested in futures contracts, a type of
derivative. A futures contract is an agreement involving the delivery of a
particular asset on a specified future date at an agreed upon price. The Fund
generally invests in futures on U.S. Treasury Notes. Upon entering into futures
contracts, the Fund maintains an amount of cash or liquid securities with a
value equal to a percentage of the contract amount with either a futures
commission merchant pursuant to rules and regulations promulgated under the 1940
Act, as amended, or with its custodian in an account in the broker's name. This
amount is known as initial margin. During the period the futures contract is
open, payments are received from or made to the broker based upon changes in the
value of the contract (the variation margin). The risk of loss associated with a
futures contract is in excess of the variation margin reflected on the Statement
of Assets and Liabilities.
Transactions in futures contracts for the six months ended February 28,
2005, were as follows:
<Table>
<Caption>
CONTRACTS
Outstanding at August 31, 2004.............................. 845
Futures Opened.............................................. 2,490
Futures Closed.............................................. (2,443)
------
Outstanding at February 28, 2005............................ 892
======
</Table>
The futures contracts outstanding as of February 28, 2005, and the
descriptions and unrealized appreciation/depreciation are as follows:
<Table>
<Caption>
UNREALIZED
CONTRACTS APPRECIATION
SHORT CONTRACTS:
U.S. Treasury Notes 2-Year Futures, June 2005 (Current
Notional Value of $207,391 per contract).................. 387 270,381
U.S. Treasury Notes 2-Year Futures, March 2005 (Current
Notional Value of $208,203 per contract).................. 119 94,153
U.S. Treasury Notes 5-Year Futures, June 2005 (Current
Notional Value of $107,578 per contract).................. 330 106,582
U.S. Treasury Notes 5-Year Futures, March 2005 (Current
Notional Value of $108,125 per contract).................. 56 65,471
--- --------
892 $536,587
=== ========
</Table>
6. DISTRIBUTION AND SERVICE PLANS
With respect to its Class A Shares, Class B Shares and Class C Shares, the Fund
and its shareholders have adopted a distribution plan pursuant to Rule 12b-1
under the 1940 Act, as
29
VAN KAMPEN CORPORATE BOND FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2005 (UNAUDITED) continued
amended, and a service plan (collectively, the "Plans"). The Plans govern
payments for: the distribution of the Fund's Class A Shares, Class B Shares and
Class C Shares; the provision of ongoing shareholder services with respect to
such classes of shares; and the maintenance of shareholder accounts with respect
to such classes of shares.
Annual fees under the Plans of up to .25% of Class A average daily net
assets and up to 1.00% each of Class B and Class C average daily net assets are
accrued daily. The annual fees for Class A Shares are paid quarterly and the
annual fees for Class C Shares are paid monthly. For Class B Shares, 75% of the
annual fees are paid monthly, while 25% of the annual fees are paid quarterly.
The amount of distribution expenses incurred by Van Kampen and not yet
reimbursed ("unreimbursed receivable") was approximately $2,050,900 and $0 for
Class B and Class C Shares, respectively. These amounts may be recovered from
future payments under the distribution plan or CDSC. To the extent the
unreimbursed receivable has been fully recovered, any excess 12b-1 fees will be
refunded to the Fund on a quarterly basis.
Included in the fees for the six months ended February 28, 2005, are
payments retained by Van Kampen of approximately $501,400 and payments made to
Morgan Stanley DW Inc., an affiliate of the Adviser, of approximately $111,600.
7. LEGAL MATTERS
The Adviser, certain affiliates of the Adviser, and certain investment companies
advised by the Adviser or its affiliates, including the Fund, are named as
defendants in a number of similar class action complaints which were recently
consolidated. This consolidated action also names as defendants certain
individual Trustees and Directors of certain investment companies advised by
affiliates of the Adviser; the complaint does not, however, name the individual
Trustees of any Van Kampen funds. The consolidated amended complaint generally
alleges that defendants violated their statutory disclosure obligations and
fiduciary duties by failing properly to disclose (i) that the Adviser and
certain affiliates of the Adviser allegedly offered economic incentives to
brokers and others to steer investors to the funds advised by the Adviser or its
affiliates rather than funds managed by other companies, and (ii) that the funds
advised by the Adviser or its affiliates, including the Fund, allegedly paid
excessive commissions to brokers in return for their alleged efforts to steer
investors to these funds. The complaint seeks, among other things, unspecified
compensatory damages, rescissionary damages, fees and costs.
The Adviser and certain affiliates of the Adviser are also named as
defendants in a derivative suit which additionally names as defendants certain
individual Trustees of certain Van Kampen funds; the named investment companies,
including the Fund, are listed as nominal defendants. The complaint alleges that
defendants caused the Van Kampen funds to pay economic incentives to a
proprietary sales force to promote the sale of proprietary mutual funds. The
complaint also alleges that the Van Kampen funds paid excessive commissions to
Morgan Stanley and its affiliates in connection with the sales of the funds. The
complaint seeks, among other things, the removal of the current Trustees of the
funds, rescission of the management contracts for the funds, disgorgement of
profits by Morgan Stanley and its affiliates and monetary damages. This
complaint has been coordinated with the consolidated complaint described in the
preceding paragraph. Plaintiff has sought leave to file a second amended
derivative compliant that alleges that the Adviser permitted or recklessly
disregarded market timing and late trading in its proprietary mutual funds in
order
30
VAN KAMPEN CORPORATE BOND FUND
NOTES TO FINANCIAL STATEMENTS -- FEBRUARY 28, 2005 (UNAUDITED) continued
to increase assets under management and fees. However, pursuant to an agreement
between the parties, that plaintiff's proposed second amended derivative
complaint was withdrawn and the allegations regarding market timing and late
trading asserted therein were filed in a separate complaint and coordinated with
other cases related to market timing that have been centralized in a federal
court.
The defendants have moved to dismiss each of these actions and otherwise
intend to defend them vigorously. While the defendants believe that they have
meritorious defenses, the ultimate outcome of these matters is not presently
determinable at this early stage of litigation, and no provision has been made
in the Fund's financial statements for the effect, if any, of these matters.
8. INDEMNIFICATIONS
The Fund enters into contracts that contain a variety of indemnifications. The
Fund's maximum exposure under these arrangements is unknown. However, the Fund
has not had prior claims or losses pursuant to these contracts and expects the
risk of loss to be remote.
31
VAN KAMPEN CORPORATE BOND FUND
BOARD OF TRUSTEES AND IMPORTANT ADDRESSES
BOARD OF TRUSTEES
DAVID C. ARCH
JERRY D. CHOATE
ROD DAMMEYER
LINDA HUTTON HEAGY
R. CRAIG KENNEDY
HOWARD J KERR
MITCHELL M. MERIN*
JACK E. NELSON
RICHARD F. POWERS, III*
HUGO F. SONNENSCHEIN
WAYNE W. WHALEN* - Chairman
SUZANNE H. WOOLSEY
INVESTMENT ADVISER
VAN KAMPEN ASSET MANAGEMENT
1221 Avenue of the Americas
New York, New York 10020
DISTRIBUTOR
VAN KAMPEN FUNDS INC.
1221 Avenue of the Americas
New York, New York 10020
SHAREHOLDER SERVICING AGENT
VAN KAMPEN INVESTOR SERVICES INC.
P.O. Box 947
Jersey City, New Jersey 07303-0947
CUSTODIAN
STATE STREET BANK
AND TRUST COMPANY
225 Franklin Street
P.O. Box 1713
Boston, Massachusetts 02110
LEGAL COUNSEL
SKADDEN, ARPS, SLATE,
MEAGHER & FLOM LLP
333 West Wacker Drive
Chicago, Illinois 60606
INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
ERNST & YOUNG LLP
233 South Wacker Drive
Chicago, Illinois 60606
* "Interested persons" of the Fund, as defined in the Investment Company Act
of 1940, as amended.
32
VAN KAMPEN
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY
We are required by federal law to provide you with a copy of our Privacy
Policy annually.
The following Policy applies to current and former individual clients of Van
Kampen Investments Inc., Van Kampen Asset Management, Van Kampen Advisors Inc.,
Van Kampen Funds Inc., Van Kampen Investor Services Inc. and Van Kampen Exchange
Corp., as well as current and former individual investors in Van Kampen mutual
funds, unit investment trusts, and related companies.
This Policy is not applicable to partnerships, corporations, trusts or other
non-individual clients or account holders, nor is this Policy applicable to
individuals who are either beneficiaries of a trust for which we serve as
trustee or participants in an employee benefit plan administered or advised by
us. This Policy is, however, applicable to individuals who select us to be a
custodian of securities or assets in individual retirement accounts, 401(k)
accounts, 529 Educational Savings Accounts, accounts subject to the Uniform
Gifts to Minors Act, or similar accounts.
Please note that we may amend this Policy at any time, and will inform you
of any changes to this Policy as required by law.
WE RESPECT YOUR PRIVACY
We appreciate that you have provided us with your personal financial
information. We strive to maintain the privacy of such information while we help
you achieve your financial objectives. This Policy describes what non-public
personal information we collect about you, why we collect it, and when we may
share it with others.
We hope this Policy will help you understand how we collect and share
non-public personal information that we gather about you. Throughout this
Policy, we refer to the non-public information that personally identifies you or
your accounts as "personal information."
1. WHAT PERSONAL INFORMATION DO WE COLLECT ABOUT YOU?
To serve you better and manage our business, it is important that we collect and
maintain accurate information about you. We may obtain this information from
applications and other forms you submit to us, from your dealings with us, from
consumer reporting agencies, from our Web sites and from third parties and other
sources.
For example:
-- We may collect information such as your name, address, e-mail address,
telephone/fax numbers, assets, income and investment objectives through
applications and other forms you submit to us.
-- We may obtain information about account balances, your use of
account(s) and the types of products and services you prefer to receive
from us through your dealings and transactions with us and other
sources.
-- We may obtain information about your creditworthiness and credit
history from consumer reporting agencies.
-- We may collect background information from and through third-party
vendors to verify representations you have made and to comply with
various regulatory requirements.
-- If you interact with us through our public and private Web sites, we
may collect information that you provide directly through online
communications (such as an e-mail address). We may also collect
information about your Internet service provider, your domain name,
your computer's operating system and Web browser,
(continued on back)
VAN KAMPEN
AN IMPORTANT NOTICE CONCERNING OUR U.S. PRIVACY POLICY continued
your use of our Web sites and your product and service preferences,
through the use of "cookies." "Cookies" recognize your computer each
time you return to one of our sites, and help to improve our sites'
content and personalize your experience on our sites by, for example,
suggesting offerings that may interest you. Please consult the Terms of
Use of these sites for more details on our use of cookies.
2. WHEN DO WE DISCLOSE PERSONAL INFORMATION WE COLLECT ABOUT YOU?
To provide you with the products and services you request, to serve you better
and to manage our business, we may disclose personal information we collect
about you to our affiliated companies and to non-affiliated third parties as
required or permitted by law.
A. INFORMATION WE DISCLOSE TO OUR AFFILIATED COMPANIES. We do not disclose
personal information that we collect about you to our affiliated companies
except to enable them to provide services on our behalf or as otherwise required
or permitted by law.
B. INFORMATION WE DISCLOSE TO THIRD PARTIES. We do not disclose personal
information that we collect about you to non-affiliated third parties except to
enable them to provide services on our behalf, to perform joint marketing
agreements with other financial institutions, or as otherwise required or
permitted by law. For example, some instances where we may disclose information
about you to non-affiliated third parties include: for servicing and processing
transactions, to offer our own products and services, to protect against fraud,
for institutional risk control, to respond to judicial process or to perform
services on our behalf. When we share personal information with these companies,
they are required to limit their use of personal information to the particular
purpose for which it was shared and they are not allowed to share personal
information with others except to fulfill that limited purpose.
3. HOW DO WE PROTECT THE SECURITY AND CONFIDENTIALITY OF PERSONAL INFORMATION WE
COLLECT ABOUT YOU?
We maintain physical, electronic and procedural security measures to help
safeguard the personal information we collect about you. We have internal
policies governing the proper handling of client information. Third parties that
provide support or marketing services on our behalf may also receive personal
information, and we require them to adhere to confidentiality standards with
respect to such information.
The Statement of Additional Information includes additional information about
Fund trustees and is available, without charge, upon request by calling
1-800-847-2424.
Van Kampen Funds Inc.
1 Parkview Plaza, P.O. Box 5555
Oakbrook Terrace, IL 60181-5555
www.vankampen.com
Copyright (C)2005 Van Kampen Funds Inc. All rights reserved.
Member NASD/SIPC. 17, 117, 217
CORP SAR 4/05 RN05-00665P-Y02/05
(VAN KAMPEN INVESTMENTS LOGO)
Item 2. Code of Ethics.
Not applicable for semi-annual reports.
Item 3. Audit Committee Financial Expert.
Not applicable for semi-annual reports.
Item 4. Principal Accountant Fees and Services.
Not applicable for semi-annual reports.
Item 5. Audit Committee of Listed Registrants.
Not applicable for semi-annual reports.
Item 6. Schedule of Investments.
Please refer to Item #1.
Item 7. Disclosure of Proxy Voting Policies and Procedures for Closed-End
Management Investment Companies.
Not applicable.
Item 8. Portfolio Managers of Closed-End Management Investment Companies.
Not applicable.
Item 9. Purchases of Equity Securities by Closed-End Management Investment
Company and Affiliated Purchasers.
Not applicable.
Item 10. Submission of Matters to a Vote of Security Holders.
Not applicable.
Item 11. Controls and Procedures
(a) The Fund's principal executive officer and principal financial officer have
concluded that the Fund's disclosure controls and procedures are sufficient to
ensure that information required to be disclosed by the Fund in this Form N-CSR
was recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and forms, based
upon such officers' evaluation of these controls and procedures as of a date
within 90 days of the filing date of the report.
(b) There were no changes in the registrant's internal control over financial
reporting that occurred during the registrant's most recent fiscal half-year
(the registrant's second fiscal half-year in the case of an annual report) that
has materially affected, or is reasonably likely to materially affect, the
registrant's internal control over financial reporting.
Item 12. Exhibits.
(a) Code of Ethics -- Not applicable for semi-annual reports.
(b)(1) A certification for the Principal Executive Officer of the registrant is
attached hereto as part of EX-99.CERT.
(b)(2) A certification for the Principal Financial Officer of the registrant is
attached hereto as part of EX-99.CERT.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
(Registrant) Van Kampen Corporate Bond Fund
By: /s/ Ronald E. Robison
----------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: April 19, 2005
Pursuant to the requirements of the Securities Exchange Act of 1934 and the
Investment Company Act of 1940, this report has been signed by the following
persons on behalf of the registrant and in the capacities and on the dates
indicated.
By: /s/ Ronald E. Robison
----------------------
Name: Ronald E. Robison
Title: Principal Executive Officer
Date: April 19, 2005
By: /s/ James W. Garrett
--------------------
Name: James W. Garrett
Title: Principal Financial Officer
Date: April 19, 2005